Federal Reserve has abandoned monetary policy according to critics
I agree, I don’t think we can call quantitative easing as a real monetary policy, more like a last ditch effort if you ask me. Feels more like desperation in the face of a dire situation that in the end will take its course no matter what. What I would like to find out is how the Fed got authorization to expand its balance-sheet past its normal $800 billion? No body without congressional support and oversight should be able to run monetary operations like this that will in the end, saddle us with much public debt.
News:
The Federal Reserve has embarked on a campaign of unsupervised industrial policy to end the country’s financial crisis, a move that could undermine its independence, a former top U.S. official said on Saturday.
John Taylor, who was under secretary of treasury for international affairs from 2001 to 2005, said the explosive growth of the Fed’s balance sheet since September was “unbelievable.”
Fed looking to purchase $500 billion in mortgage backed securities (MBS) in 2009
Buying securities of overpriced homes is not going to really solve anything except create more debt through the issuance of more treasuries. Asset prices have to come down over time so these purchases will just bailout the owners of these securities and foot the U.S. taxpayer with the bill, while the MBS owners will now have good money that was thrown at bad assets.
News:
The U.S. Federal Reserve on Tuesday moved forward aggressively with an effort to drive down mortgage costs, setting a goal of buying $500 billion (346.4 billion pounds) in mortgage-backed securities by mid-2009.
Hedge funds gain access to $200 billion in U.S. taxpayer funds
Well here we go, here is your “Mainstreet” bailout. I am just shocked that speculator or investors are getting their hands on our money. We are in a serious crisis and this is a sign the the dollar is going die and we are going to be hit by a depression and hyper-inflation. Now we are at 0% on the interest rate the only thing they have left is to print money or what they call Quantitative Easing. Good Luck, take measure to be prepared.
News:
Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn program intended to support consumer credit.
The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.
Fed’s words may speak louder than actions now or not?
I think not, with the Federal Reserve basically in a zero-interest rate environment and the U.S. is losing jobs left and right and that violates one of their mandates to promote full employment. Their words are meaning less and less each day because they do not have any tools that will fix our situation.
They can bailout bad companies and print money but that does not create long-term jobs or helps get consistent money into the lower and middle class so they can consume goods and keep businesses from failing. The Fed has no credibility with the public and we are going to take the same course in the end regardless of their action. .02
News:
This time the Federal Reserve’s words may say more than its actions. The Federal Open Market Committee meets today and tomorrow and will debate cutting interest rates yet again — a given at this point, considering the dire condition of the U.S. economy. What the FOMC says in the statement it issues after the meeting will be paramount.
Federal Reserve to press interest rates toward zero percent
Well this aligns with most analyst predictions of a zero-interest rate environment coming to America. This can only last for so long, at some point interest rates will have to rise to pull this excessive money that has been injected into the system and if our fundamental problems with the destruction of the middle class is not solved then it will just crush the economy again and make things even worse. How long will it take until we start hearing real solutions from our officials that solve the real problems and does not reward people that make problems?
News:
The U.S. Federal Reserve is expected to drop interest rates close to zero on Tuesday, but anticipated remarks on unconventional methods to dispel a year-old recession are what will really matter.
Update: Fed refuses to disclose recipients of $2 trillion in emergency loans
Interesting that the Federal Reserve said that it was a trade secret on who got that money. Here is the following definition of “Trade Secret” according to Wiki :
A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. I am not sure if our tax dollars should be loaned to anyone as a secret through an semi-private organization that has the backing of our governement. I believe what they do not want us to know is that we have sent money to bail out foreign speculators.
News:
The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.
Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.
Fed’s Lacker says don’t ignore inflation down the road
I agree with Lacker’s assessment on inflation and how we should have our long-term strategy in mind at all times as well. While we have asset classes falling in value, the likeliness of us having run-away inflation is much lower. With all of the money we have deployed in our system, when we do have a recovery, we will see some serious inflation that we have not seen for a long time in this country. So when you see prices skyrocket, then you know that you are now paying for the U.S. bailing out failed financial institution and failed industries.
News:
Richmond Federal Reserve Bank President Jeffrey Lacker said on Wednesday the economy should begin to pick up next year and warned that policy-makers must not ignore inflation with conditions set for recovery.